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The State of Great

The hotel industry is breaking records, here’s what executives attending BITAC F&B said this morning on how they see the state of the lodging business.

Monday, February 10, 2014
Glenn Haussman
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All hail the upswing! The lodging industry is in record breaking mode. After the depth of the Great Recession it’s great to see the amazing heights the industry is achieving. And the best news is there is still so much upside profit potential to be mined during the next few years. People just have to be savvy enough to take their share.

As we have discussed here in the pages of Hotel Interactive before the hotel business is perfectly positioned in an amazing sweet spot as a confluence of factors play into the industry’s favor. More people are traveling than ever before and those same travelers feel wealthier as 401k values and home values soar, which makes them willing to pay more for a hotel room. Plus, supply in most markets is below demand levels. That’s keeping hotels filled while investors are just getting started on projects that won’t really impact raw supply numbers until 2015 and beyond.

When you look at industry fundamentals, records are being broken everywhere, including most industry revenue ever at $122 billion according to STR. Other records broken in 2013 were ADR, RevPAR, and most room night sold at 1.1 billion.

According to numbers supplied by PKF, final 2013 occupancy was 62.3 percent and is expected to rise to 63.2 percent and 64.4 percent for 2014 and 2015 respectively. It’s also expected that ADR will increase 4.8 percent to $115.60 this year and rise another 5.6 percent to $122.12 in 2015. ADR and occupancy increases together will help propel RevPAR from $68.69 (5.4 percent increase from 2012) up another 6.6 percent to $73.10 in 2014 while rising an additional 7.5 percent to $78.62 in 2015.

Even better news is the economy is soaring, both in and out of the hotel industry. The general economy is seeing record high stock market valuations while large type sale items such as homes and cars are doing very well. Plus, more things are being made in America than in a generation.

At this week’s BITAC Food & Beverage East, taking place this week at the Grand Floridian Hotel located at the Walt Disney World Resort, we utilized our advanced real-time polling system to break down some of the persisting myths about the state of the economy, the hotel economy and the travel industry at large.

BITAC is of course the industry leading one-on-one meetings and relationship building event. This week marks the 46th BITAC meeting, which is attracted the F&B executive elite representing leading and forward thinking companies. And they’re all here to come together at BITAC to problem solve, network, sign deals and exchange ideas to move forward the quality of experiences for hotel guests, while adding profits to the bottom line. There’s even time to cut loose, be social and network in a luxurious and relaxed environment.

Here is what BITAC F&B attendees are thinking as we get settled into 2014:

How do you feel about the state of the U.S. economy compared to one year ago?
Bullish- 12.5%
It’s good – 52.3%
Neutral - 24.2%
A little worried- 10.2%
Freaked out - 0.8%

Do you feel your company is fully leveraged to take advantage of this upswing?
Very ready - 46.6%
Somewhat ready - 37.4%
Neutral - 9.9%
We are not prepared - 5.3%
Just hanging on - 0.8%

How do you feel about the state of the TRAVEL economy compared to one year ago?
Bullish - 18.3%
It’s good - 69.0%
Neutral - 11.9%
A little worried - 0.0%
Freaked out - 0.8%

Are you personally feeling more economically confident this year?
Very much so - 29.1%
Somewhat - 59.8%
I’m a bit nervous - 9.4%
I am feeling extremely conservative - 1.6%

Did your hotels break records with key fundamentals such as ADR & RevPAR in 2013?
We broke records! - 47.2%
We were close, but not yet - 28.3%
Not happening for us - 13.2%
Our numbers stink - 11.3%

How much do you expect to see ADR rise in 2014?
1-2% - 32.3%
3-5% - 40.4%
5-10% - 18.2%
10% or more - 5 5.1%
None - 2.0%
ADR will decrease - 2.0%

How much do you expect to see RevPar increase in 2014?
1-2% -21.1%
3-5% - 52.6%
5-10% - 21.1%
10% or more - 0.0%
None - 3.2%
RevPAR will decrease - 2.1%

How do you see the future of hotel markets?
Haves and have not spread further apart - 31.6%
Enough customers to go around everywhere - 46.8%
Disparity of markets continues - 21.5%

What is your perception of hotel owners’ approach toward raising rates?
Aggressive - 33.0%
Timid - 19.3%
Cautiously Optimistic - 47.7%

Are you seeing an uptick in new construction?
A significant uptick - 33.0%
A moderate uptick - 47.3%
Very few hotels are being built - 19.6%

In what year will the hotel industry peak?
2014 - 4.0%
2015 - 15.2%
2016 - 32.3%
2017 - 27.3%
2018 and beyond - 21.2%




Credit
Glenn Haussman    Glenn Haussman
Editor in Chief
Hotel Interactive, Inc.

Bio: Glenn Haussman is Hotel Interactive's Editor In Chief, where he manages all editorial content for the hotel industry’s leading online information resource. Here he creates unique and in-depth content that stimulates and educates the publication’s ...
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